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Last Update: March 2015

Commentary on the recent development of price indices

In February, the FAO price indices of oilseeds and oilmeals fell by 3–4 percent (shedding respectively 5 and 9 points), while the index for vegetable oils rose, but by only 0.4 percent (or 0.6 points). All three indices fared at multi-year lows:  while the oilseeds and oils indices stood at 5-year lows, the index for oilmeals recorded a 3-year low.

Global oilseed and oilmeal prices continued losing strength, mainly reflecting prospects of large soybean availabilities in 2014/15 and beyond. Indeed, although soybean crop forecasts for  Brazil and Paraguay had to be lowered somewhat (as poor weather conditions impaired yield prospects), world production in 2014/15 is still expected to surpass last season’s all-time record by 3 million tonnes or 10 percent. Assuming current forecasts materialize, global soybean output would exceed demand for the third consecutive season, boosting global end-of-season stocks. Concerns over slow farmer selling in Argentina and recent truck driver strikes in Brazil – which could trim shipments from South America – averted an even steeper slide in soybean prices in February. The steady decline in international soybean prices also dragged down those of rape and sunflower seed – despite somewhat tighter global supply prospect for those oilcrops.

As to vegetable oils, the marginal gain in the index was mainly caused by an appreciation of international prices of palm oil, while those of soyoil and other major vegetable oils continued to fall. Interestingly, the rebounding of palm oil was limited to the first week of February, following which prices eased again. The temporary spike is attributed to changes in Indonesia’s biofuel policy that are likely to bolster domestic palm oil consumption, hence reducing availabilities for export. As to soyoil, the decline in prices that commenced in mid 2014 continued in February (with spill-over effects on other vegetable oils), mostly reflecting larger than anticipated shipments and the prospect of bumper soybean harvests in South America.

 

Components of the oilseeds price index: Soybeans, US, cif Rotterdam; Copra Phil./Indo., cif NW Eur. port; Rapeseed, Europe, 00, cif Hamburg; Linseed, Canada, No.1, cif NW Eur. port; Sunseed, EU, cif Rotterdam (please note that sunseed has been added to the index only in January 1976).

Components of the oils/fats price index: Soybean oil, Dutch , fob ex-mill; Sun oil, EU, fob NW Eur. port; Rape oil, Dutch, fob ex-mill; Groundnut oil, any origin, cif Rotterdam; Cotton oil, US, PBSY, fob Gulf; Coconut oil, Phil./Indo., cif Rotterdam; Palmkernel oil, Mal./Indo., cif Rotterdam; Palm oil crude, cif NW Eur. port; Linseed oil, any origin, ex-tank, Rotterdam; Castor oil, ex-tank Rotterdam.

Components of the meals/cakes price index: Soy meal, 44/45%, fob ex-mill Hamburg; Sun pell., 37/38%, Arg., cif Rotterdam; Rape meal, 34%, fob ex-mill Hamburg; Copra exp. pell., Phil., domestic; Palmkernel  exp., 21/23%, cif Rotterdam.